The Fed Is Soft And The Renminbi Is Rising. Is RMB Appreciation A Good Thing?

After entering 2019, the RMB exchange rate against the dollar swept away, and the rally was like a rainbow.

In January 30th, the central parity of RMB against the US dollar was 6.7343, up 13 basis points from the previous trading day.

It has hit a new high since July 19, 2018.

The RMB exchange rate has risen 1527 basis points this year, or 2.27%.

Recently, at a news conference, Federal Reserve Chairman Powell decided not to raise interest rates on the basis of the uncertainty of the US economic prospects. He also deleted the wording of further incremental interest rates in the statement after the meeting, and increased the information on the scale reduction to add more flexibility to it.

According to Reuters analysis, this means that the Fed formally "soft" and began to change its policy stance.

The external pressure of the RMB exchange rate has been reduced, and the RMB has strengthened even more.

Is RMB appreciation really a good thing?

In fact, appreciation of the renminbi is a good thing or a bad thing. It depends on the specific needs of a particular period.

For now, it must be a good thing.

In 2018, because of the four consecutive interest rate hikes in the United States, the US dollar index rose all the way, resulting in the withdrawal of funds from emerging markets and the return to the United States, financial market turbulence. In addition, China's economy is in the stage of financial deleveraging, industrial restructuring and industrial upgrading. Relatively strong US economy and strong US dollar have led to insufficient investor confidence, outflow of funds, declining foreign exchange reserves, and continued depreciation of the RMB, which has brought great pressure to domestic economic development.

Today, a proper appreciation of the renminbi means inflow of funds, which is beneficial to the construction and development of the national economy, and will bring certain economic recovery effect to our country.